Thinking about starting a business later
in your career? The statistics can be
of-putting: Some 20 percent of small businesses fail within their frst year, according
to the Small Business Administration,
and only about a third survive 10 years
or more. In most cases, that means you
may be facing fnancial failure just as
you’re ready to stop working.

“You have to know your own money
and have your own fnancial security, or you
are taking an unnecessary risk,” says Ilyce
Glink, a friend and fellow personal fnance
journalist. Glink was 51 when she started
Best Money Moves, a fnancial-advice
employee beneft company based in
Glencoe, Illinois, and she knew whatever
she did to launch her new business had to
not derail her family’s retirement prospects.

But as a serial entrepreneur, who’d previously started a communications agency and
a media company, Glink had an idea of what
to expect in terms of startup costs and pay-ofs—and how to avoid draining her retirement savings. So if you’re thinking about
starting something new, follow her example.

Vanguard, Fidelity
Investments, Kiplinger,
and TIAA all offer
web-based calculators
that can give you a
quick snapshot of your
financial situation.

Glink and herhusband, Sam, havebeen saving 20 to 25percent of their incomesince they startedworking, so they havesubstantial 401(k)assets. They’ve largelypaid off their home,and they get regularincome from rentalproperties, so theyshould have plenty ofmoney to sustain theircurrent lifestyle.

Glink had also sold
her interest in a previous business, the
publisher of Medicare
NewsGroup. Because
this money was an
unexpected bonus,
rather than something
she was counting on to
finance her retirement,
she felt comfortable
dedicating it to the new
venture. “The question
I asked myself was:
If this fails and I lose all
this money, am I still
fine?” Glink recalls.

“The answer was yes. Itwasn’t like, if I lost this,I was never going to beable to retire.”

hHave a plan

You don’t necessarily
need a formal business
plan—the type required
to get outside financing—at the outset. But
you do need a clear
idea of what your
product is; what it will
cost to produce; why
people would want to
buy it; and whether
they’d be willing to pay
enough to make the
business profitable in
a reasonable period
of time. You also need
to know how you are
going to support yourself and your business
in the interim, which
could last several years.

“If you’re expectingthis company to createa financial windfall inthe first year or two,you have to adjust yourexpectations,” saysRoss Polking, leadadviser with the FosterGroup, a Midwesternwealth-managementfirm. “You have to beready to live off zeroincome for a coupleof years.”

hbe ready to adapt

Even if you have a
perfect business plan,
expect that your numbers will change. About
a year ago, for example, Glink realized that
her company needed
more money to hire
seasoned salespeople
and develop its products. Adjusting to
those realities is normal—but you need
to keep close track
of how quickly you’re
burning through cash,
and when you need to
start replenishing it.

(And give yourself
enough time to do so:
Bank loans can take
months to secure, and
lining up venture capital can take longer.)

Glink started talking to
angel investors, and
eventually completed
two rounds of outside
funding. “I’m running a
company called Best
Money Moves. If I didn’t
know what the best
money moves were for
us,” she quips, “what
would that say about
our business?”

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